can anybody please explain the tax consequences of a company having surplus funds making an interest free loan to an unconnected uk registered charity
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You'd be best discussing this with an accountant.
You will also need a solicitor to ensure an appropriate loan agreement is in place.
I would expect the interest that is waived should be calculated and treated as a donation. Try looking up rules around services given to charities FOC, these have to be accounted for as if they have been paid for but then offset by a donation to the charity. The charity should also show this as a donation received. Hope this points you in the right direction.
I would expect the interest that is waived should be calculated and treated as a donation.
Really? Could you point me to the source for that? Ta
Thank you Westbookkeeping for your response. The reason for my initial enquiry was because I could not find any legislation that deals with the tax con sequences and/or permissibility of private companies making loans to charities. The loan will be repayable and it does make senses to calculate the ‘interest’ as a qualifying donation in the ct return.
Just checking - will you treat this mythical interest as income too ?
Donations have to be paid in cash to be eligible for corporate tax gift aid, so a notional 'unpaid interest charge wouldn't have any effect